Pentagon Shelves Air Force Tanker CompetitionThe Pentagon told lawmakers Wednesday that it will not award a $35 billion contract for a new refueling tanker. The announcement puts on hold the intense competition between Boeing and Northrop Grumman to replace the Air Force's aging fleet.

The Pentagon told lawmakers Wednesday that it will not award a $35 billion contract for a new refueling tanker. The announcement puts on hold the intense competition between Boeing and Northrop Grumman to replace the Air Force's aging fleet.

RENEE MONTAGNE, host:

The Pentagon today told lawmakers that it will not award a $35 billion contract for a new refueling tanker. The announcement puts on hold the intense competition between Boeing and Northrop Grumman to replace the Air Force's aging fleet.

NPR's Pentagon correspondent Tom Bowman is following this story. And he joins us now to talk about it. And Tom, Defense Secretary Robert Gates made the announcement. What did he say about why this contract has been cancelled?

TOW BOWMAN: Well, Gates made the announcement just about an hour ago to the House Armed Services Committee. And Gates essentially threw up his hands and said there's not enough time left in the administration to award a contract. They had hoped to award it by December. And he said they'll have it go into the next administration next year to award a contract. And let's listen to what he had to say.

Secretary ROBERT GATES (U.S. Department of Defense): Over the past seven years this process has become enormously complex and emotional, in no small part due to mistakes and missteps on the part of the Defense Department. It is my judgment that in the time remaining to us we cannot complete a competition that would be viewed as fair and competitive in this highly-charged environment.

BOWMAN: And that was what Gates said this morning. And basically, he said he's going to kick it into the next administration. They had hoped to award it by year's end. Now he's seeing that's impossible and they'll have to go into next year.

MONTAGNE: Well, I'd like to ask you about the current tanker in operation, but can you give us a thumbnail of what's so complex and so political about this?

BOWMAN: Well, first of all, they awarded the contract to Northrop Grumman and the European giant Airbus. And essentially it was a surprise to everyone that Airbus and Northrop Grumman were awarded this contract; everybody expected Boeing to get it. And when Boeing didn't get it, they protested. And the Government Accountability Office sided with Boeing, saying the contract was bungled, the Air Force made a lot of mistakes overcharging Boeing in some cases, and said it made serious errors, and basically sent it back to the drawing board.

MONTAGNE: So now it's a little too late, according to Secretary Gates, to really sort this out and make a decision. Again, you've actually seen the current tanker in operation from both the inside and from an F-16 that was being refueled. Do you mind describing it to us?

BOWMAN: Well, it's essentially a flying gas station. I was in the current tanker called KC-135, and you go to the back of the plane and the person that operates this boom - essentially, you know, the gas nozzle - lies on his stomach and there's a Plexiglas window and you can see the boom extend out from the plane, and then the plane actually flies up to it. It's almost like a bee sticking into a flower to get the gas. It pulls the gas out. And I've actually seen it from the other side too, flying up in an F-16 to refuel. It really is quite an amazing sight.

MONTAGNE: Well, altogether, what does this decision mean for the new tanker, the ones that I guess are quite old? Is it a problem for the military?

BOWMAN: Well, Secretary Gates says they can manage for the next couple of years or so. There's enough money for maintenance for some of these tankers. And the fleet is, you know, four decades old. He says they can work through that problem in the next year or two. But everyone in the Pentagon and the Air Force says, listen, we've got to get a replacement tanker. But this complicates things. Most people think that who is ever awarded the contract next year, be it Boeing or Airbus Northrop Grumman, there probably will be a protest again in further delaying it.

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